Safeco Fined $434,000 For Insurance Violations

DIANE LEVICKThe Hartford Courant

State regulators have fined five Safeco companies a total of $434,000 for charging customers the wrong rates, improperly canceling customers, and using unlicensed adjusters and agents who weren't appointed to sell for the insurer.

The fine announced Thursday -- one of the largest single levies by the Connecticut Insurance Department -- resulted from a market conduct examination, which checks on how an insurer is treating customers and whether it's following laws and regulations.

"While the Connecticut Insurance Department acknowledges Safeco's commitment to corrective action, we are disturbed by the number and breadth of violations our exam team uncovered," said Insurance Commissioner Thomas R. Sullivan.

"Our examination of this firm calls into question the extent to which they have proper compliance monitoring and controls," Sullivan said. "On behalf of consumers of this state, we will be actively scrutinizing this company going forward to ensure they are committed to conducting business within the boundaries of our insurance laws."

The department's report cited numerous underwriting and rating errors, which resulted in undercharges and overcharges of premiums, and incorrect amounts of coverage. The errors were mainly on commercial property-casualty policies.

Regulators found 55 instances of agents selling Safeco insurance who were not appointed by the company to do so, and 93 instances of people acting as casualty adjusters without being licensed as required by Connecticut law.

Other violations included Safeco's failure, when offering settlements, to compensate people for the loss of use of their vehicle after an accident. The department said that violation occurred 23 percent of the time on average at Safeco.

The company, which was acquired by Liberty Mutual Group last year, said the problems cited by regulators didn't involve "intentional or irresponsible" actions. "In recent months, we've worked diligently with the Connecticut insurance commissioner's office to correct the issues outlined as a result of the exam, including voluntarily refunding more than $13,000 to affected business policyholders."

Safeco agreed to do a complete review of its practices to ensure compliance, and to submit a report to the commissioner within 90 days.

The Safeco companies fined were: American Economy Insurance Co., American States Insurance Co., General Insurance Company of America, Safeco Insurance Company of America, and Safeco Insurance Company of Illinois.